What is a Service?

A service is any act of performance that one party can offer another that is

essentially intangible and does not result in the ownership of anything; its production may or may not be tied to a

physical product.

Service Sectors

GovernmentPrivate

nonprofit

ManufacturingBusiness Retail

Nature of Services

Characteristics

• Intangibility• Inseparability• Variability• Perishability

• Cannot be touched, seen, tasted, heard, or smelled before purchase

• Lack of trial means higher consumer risk

• Consumers rely on cues to draw quality inferences

• Marketers must try to “tangibilize the intangible”

Nature of Services

Characteristics

• Intangibility• Inseparability• Variability• Perishability

• Services are produced and consumed at the same time (air travel)

• Service providers and sometimes other customers become part of the service (restaurant)

• Strong preferences for service providers exist

Nature of Services

Characteristics

• Intangibility• Inseparability• Variability• Perishability

• Service providers vary with respect to attitudes, skills, mood, etc. Even the same provider may give different service on a different day.

• Quality control is critical:• Hiring the right people• Standardizing service• Monitoring satisfaction

Nature of Services

Characteristics

• Intangibility• Inseparability• Variability• Perishability

• Services can not be inventoried or otherwise stored

• Capacity / demand management is critical:• Demand side strategies• Supply side strategies

Marketing strategies for service firms

• The traditional four P’s marketing approach work well for goods, but additional elements require attention in services businesses. Three more elements of marketing mix are

suggested which are:

• People • Physical evidence• Process

Marketing strategies for service firms

• PeopleAn essential ingredient to any service provision is the use of appropriate staff and people. Recruiting the right staff and training them appropriately in the delivery of their service is essential if the organization wants to obtain a form of competitive advantage. Consumers make judgments and deliver perceptions of the service based on the employees they interact with.

• ProcessRefers to the systems used to assist the organization in delivering the service. Imagine you walk into Burger King and you order a Meal and you get it delivered within 2 minutes. What was the process that allowed you to obtain an efficient service delivery? Banks that send out Credit Cards automatically when their customers old one has expired again require an efficient process to identify expiry dates and renewal.

Marketing strategies for service firms

• Physical EvidenceWhere is the service being delivered? Physical Evidence is the element of the service mix which allows the consumer again to make judgments on the organization. If you walk into a restaurant your expectations are of a clean, friendly environment. On an aircraft if you travel first class you expect enough room to be able to lay down.

Categories of Service Mix

Pure tangible good

Good w/ accompanying services

Hybrid

Service w/ accompanying goods

Pure service

Service Distinctions

• Equipment-based or people-based• Service processes• Client’s presence required or not• Personal needs or business needs• Objectives and ownership

Continuum of Evaluation for Different Types of Products

Distinctive Characteristics of Services

Intangibility

Inseparability

Variability

Perishability

Physical Evidence and Presentation

Place

People

Equipment

Communication material

Symbols

Price

How to Increase Quality Control

Invest in good hiring and training procedures

Monitor customer satisfaction

Standardize the service-performance process

Matching Demand and Supply

Demand side• Differential pricing• Nonpeak demand• Complementary

services• Reservation

systems

Supply side• Part-time

employees• Peak-time efficiency• Increased consumer

participation• Shared services• Facilities for future

expansion

Improving Service Quality

• Listening• Reliability• Basic service• Service design• Recovery

• Surprising customers

• Fair play• Teamwork• Employee research• Servant leadership

Root Causes of Customer Failure

Solutions to Customer Failures

• Redesign processes and redefine customer roles to simplify service encounters

• Incorporate the right technology to aid employees and customers

• Create high-performance customers by enhancing their role clarity, motivation, and ability

• Encourage customer citizenship where customers help customers

Three Types of Marketing in Service Industries

Factors Leading to Customer Switching Behavior

• Pricing• Inconvenience• Core Service Failure• Service Encounter Failures• Response to Service Failure• Competition• Ethical Problems• Involuntary Switching

Gaps That Cause Unsuccessful Service Delivery

• Gap between consumer expectation and management perception

• Gap between management perception and service-quality specifications

• Gap between service-quality specifications and service delivery

• Gap between service delivery and external communications

• Gap between perceived service and expected service

Determinants of Service Quality

Reliability

Responsiveness

Assurance

Empathy

Tangibles

Best Practices• Strategic Concept• Top-Management

Commitment• High Standards• Self-Service

Technologies• Monitoring Systems• Satisfying Customer

Complaints• Satisfying

Employees

Marketing Debate

Is service marketing different fromproduct marketing?

Take a position:1. Product and service marketing are fundamentally different.

or

2. Product and service marketing are highlyrelated.

Marketing Discussion

Colleges and universities can be classified as service organizations.

How can you apply the marketingprinciples developed in this chapter to your school?

Do you have any advice as to how it could become a better service marketer?